Yielding Wealth | Personal Finance

Buying a Car? 5 Things You Shouldn’t Tell the Salesperson

by miranda on July 10th, 2008

Buying a car is a process fraught with pitfalls. Say the wrong thing, and the salesperson can see how to corner your, and get you to pay a little bit more. Or a lot more.

If you want to get a better deal when buying a car, here are 5 things to avoid telling the salesperson unless you absolutely have to:

1. What monthly payment you’d like. It seems counterintuitive not to tell the car salesperson what sort of monthly payment you want. But consider this: The salesperson can get you in a longer loan. Say you only want a monthly car payment of $250. If the salesperson gets you into a new car with 72 month financing, that’s going to cost you a lot more than buying used with 48 month financing. You’re still only paying $250 a month, but the added payments — and the interest you pay on the longer loan — can mean an overall difference of thousands of dollars.
2. You really like the car. Don’t wear your emotions on your sleeve. You don’t want to let the salesperson know how much you like a car. This lets them know that you probably won’t walk away, making you an easy mark for the old “We-ell, someone was just in here and seemed really interested in it. If you like it that much…”
3. You really need the car. Do you need personal transportation quickly? It’s fine to think that, but don’t tell the car salesperson. Why? Because that’s a clue in that you may not be too particular about the deal, and may not look at the paperwork and the terms too closely. And it is an excuse for additional fees as the salesperson offers to “help” you get quick financing and move the deal along. Besides, the desperate party is always at the disadvantage in these types of transactions.
4. You have a trade in. If at all possible, you should bring up the trade in after you’ve talked price a little bit. Or, better yet, have pretty much decided on a price. And don’t tell your car salesperson that you have the vehicle with you. They’ll ask for the keys and hand them off for someone to look at the car. Meantime, they’ll quote you a higher price so that the trade in doesn’t impact them as much. If the salesperson asks whether you have a trade in, be enigmatic: “I’m not really thinking of trading in right now, but I might.” Likewise, hold off on mentioning if you plan to pay in cash. Dealers get kickbacks and commissions on loans as well. So dealers prefer you to pay with financing. Gets them more money. Mention cash after you have agreed on a price. Most car salespersons assume that you will pay with financing, so they don’t ask if it will be a cash sale.
5. You’re concerned about your credit. Most car dealerships will find a way to finance anyone. Don’t tell the car salesperson that you are concerned about your credit. Since the dealership benefits from loans made through its financing department, telling the salesperson that you are concerned is an invitation for confirmation. “Because of your credit, we can’t offer you the best rate…” Instead, get pre-approval from a bank or credit union ahead of time. Know what you qualify for, and your interest rate. And use it to negotiate. If the car dealership doesn’t offer you what you want, you have other financing in place.

Do you have any tips for negotiating when buying a car?

image source: Miranda Marquit

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POSTED IN: Consumer warning, Family finances, Money advice, Personal Finance